In the past, payment shock has been what a new homeowner felt when they realized their mortgage payment was substantially higher than their rent payment. Now, payment shock occurs when a homeowner has just realized that his adjustable-rate mortgage payment is taking a big leap.
All those people who bought homes over the last few years with interest only and adjustable rate mortgage (ARM) loans are experiencing this payment shock now. They were good programs when the market was booming and rates were down. But now the market has slowed and rates have climbed a little. And long with the climbing rate comes the increase in payment amount.
Eileen Smith with Courier Post Online has written a good article discussing the options a homeowner has at this point. If you can refinance with a fixed rate that is lower than your adusted rate it might be advisable to do so. However, some loans have a pre payment penalty so it is important that you read over your mortgage agreement. You may or may not be stuck with the high adjustable rate.